Climate Is Still Top of Mind for CEOs in 2025—Investors Should Take Note

As the ESG landscape evolves, some investors may believe that climate concerns are taking a backseat due to political headwinds and regulatory uncertainty. However, the latest data from The Conference Board’s C-Suite Outlook 2025 from the Harvard Law School Forum on Corporate Governance tells a different story: climate risks and water management are top environmental concerns for U.S. CEOs, underscoring that businesses remain acutely aware of the financial and operational stakes tied to climate change.

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Climate and Water: Business Imperatives, Not Afterthoughts

Climate events are the number one external ESG-related factor expected to impact corporate America in 2025. The last two years have seen record-breaking climate disasters in the U.S., with 27 extreme weather events causing losses exceeding $1 billion each in 2024 alone. CEOs recognize that this is not a future risk—it is happening now.

Water management has also climbed the ranks, now sitting as the second-highest environmental priority for U.S. business leaders. Concerns over water scarcity, operational risks, and investor scrutiny on water stewardship are pushing companies to focus on efficiency, recycling, and watershed restoration projects. These issues are not theoretical—they directly impact supply chains, production capabilities, and financial performance.

Investors Should Stay Focused on Climate and Water Risks

Despite political narratives suggesting an ESG pullback, climate remains a material business risk that CEOs are actively managing. Investors who assume that climate is being “sidelined” could be making a costly miscalculation. Companies are still integrating climate resilience into strategic planning, and many U.S. firms remain aligned with international sustainability frameworks like the EU’s Corporate Sustainability Reporting Directive (CSRD).

Furthermore, the business case for climate action remains strong. Rising insurance costs due to climate-related damages, supply chain vulnerabilities, and shifting consumer preferences mean that companies ignoring climate risks could face financial underperformance. Investors should continue to assess how well companies are adapting to these realities rather than assuming ESG concerns are fading from executive agendas.

The Anti-ESG Narrative: A U.S.-Specific Risk, Not a Global Trend